Correlation Between TransAKT and China Teletech

Can any of the company-specific risk be diversified away by investing in both TransAKT and China Teletech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TransAKT and China Teletech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TransAKT and China Teletech Holding, you can compare the effects of market volatilities on TransAKT and China Teletech and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TransAKT with a short position of China Teletech. Check out your portfolio center. Please also check ongoing floating volatility patterns of TransAKT and China Teletech.

Diversification Opportunities for TransAKT and China Teletech

-0.32

Correlation Coefficient

TransAKT  China Teletech

Very good diversification

The 3 months correlation between TransAKT and China is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding TransAKT and China Teletech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Teletech Holding and TransAKT is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TransAKT are associated (or correlated) with China Teletech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Teletech Holding has no effect on the direction of TransAKT i.e., TransAKT and China Teletech go up and down completely randomly.

Pair Corralation between TransAKT and China Teletech

Given the investment horizon of 90 days TransAKT is expected to generate 1.02 times less return on investment than China Teletech. In addition to that, TransAKT is 1.03 times more volatile than China Teletech Holding. It trades about 0.15 of its total potential returns per unit of risk. China Teletech Holding is currently generating about 0.15 per unit of volatility. If you would invest  0.09  in China Teletech Holding on December 5, 2024 and sell it today you would earn a total of  20,000  from holding China Teletech Holding or generate 2.222212222E7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TransAKT  vs.  China Teletech Holding

TransAKT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

China Teletech Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Teletech Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, China Teletech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TransAKT and China Teletech

The main advantage of trading using opposite TransAKT and China Teletech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TransAKT position performs unexpectedly, China Teletech can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in China Teletech will offset losses from the drop in China Teletech's long position.

The idea behind TransAKT and China Teletech Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.